Shares continued to fall in London today following yesterday's global rout after the Organisation for Economic Co-operation and Development (OECD) warned that the global recession will be even worse than expected.

After an early rally of around 30 points, the FTSE 100 closed at a new six-year low of 3512.09, down 113.74 or 3.14%. Yesterday the index plunged by 200 points to its lowest level since March 2003.

This followed further falls on Asia overnight, where the Hang Seng index in Hong Kong fell by 2.3% and Japan's Nikkei lost 0.7%.

"The recession will deepen, there's no doubt," said OECD chief economist Klaus Schmidt-Hebbel. "I think this quarter will be the worst quarter of all."

In January the International Monetary Fund cut its projection for global growth in 2009 from 2.2% to 0.5%. The OECD is now working on its own new projections for the downturn.

"The shape of it will be a significantly deeper recession than what was forecast by the IMF in January, at all levels," said Schmidt-Hebbel.

With little to cheer the markets, CMC Markets dealer Matt Buckland warned that they are likely to remain volatile.

"Sentiment looks set to be the dominating factor in the hours ahead and, put simply, if there's a genuine belief that further value needs to be taken out of the market then we'll be in for another ugly session," he said.

Ben Bernanke warned today that there was no chance of an economic recovery until stability returned to the financial sector. The Federal Reserve chairman told the Senate budget committee that the US government may have to inject more funds into the banking sector.

Richard Turner, a trader at IG Index, said there was little to stop the Dow from falling further in coming days. "6,500 is the next big level," he said. "You'd be very brave or very stupid to call the bottom of the market."

"Sentiment towards the banking sector is still very negative," said David Jones, chief market strategist at IG Index.

Sterling was also under pressure, threatening to fall below $1.4 against the dollar. The Bank of England will start its two-day meeting on interest rates tomorrow, and is expected to cut again. Howard Archer of Global Insight believes the cost of borrowing will call by another half-point to 0.5%.